WPP reports 15.1% fall in net sales

Must Read

List of United Bank for Africa (UBA) Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number that usually identifies both the bank and the branch where an account is held. The sort...

How To Block Your Bank Account And SIM Card In Case Of Emergency

Losing your phone and wallet or having them stolen can be very frustrating. However, in case that happens to...

List of Access Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number which usually identifies both the bank and the branch where an account is...
- Advertisement -

WPP’s Revenue in the first half was £5.6 billion, down from £6.4 billion in the first half of 2019. Revenue less pass-through costs were £4.7 billion, down from £5.2 billion in the first half of 2019.

Resilient performance in a challenging environment; market-leading new business performance; improved liquidity and on track to be towards the upper end of £700-800m cost savings target; an interim dividend of 10p declared.

WPP’s H1 and Q2 financial highlights

  • WPP H1 reported revenue -12.3%, LFL revenue -11.5% (Q2 -18.4%)
  • H1 revenue less pass-through costs -10.2%, LFL revenue less pass-through costs -9.5%
  • Q2 LFL revenue less pass-through costs -15.1%: US -9.6%, UK -23.3%, Germany -11.6%, Greater China -3.1%, India -25.1%
  • H1 headline operating margin 8.2%, down 3.7pt on the prior year as cost savings offset the majority of revenue decline
  • Cost savings of £296 million in H1, on track, to deliver towards the upper end of the £700-800 million targets. Around 25% of these savings expected to be permanent when returning to 2019 levels of revenue less pass-through costs
  • WPP reported loss before tax impacted by £2.7 billion of impairments (£2.5 billion goodwill, £0.2 billion investment and other write-downs); relating to acquisitions whose carrying values have been reassessed, triggered by the impact of COVID-19, and driven by a combination of higher discount rates, a lower profit base in 2020 and lower industry growth rates
  • WPP’s Net debt at 30 June 2020 £2.7 billion, down £1.5 billion year-on-year reflecting Kantar transaction and strong working capital management

Strategic progress, shareholder returns and outlook

  • Transformation delivering results: VMLY&R and Wunderman Thompson our two best-performing integrated agencies
  • Strong new business performance, reflecting enhanced offer and improved collaboration
  • Continued recognition of creativity and effectiveness: Effies winner for a ninth successive year; Cannes Lions Agency Holding Company of the Decade
  • 2019 final dividend cancelled to support lower leverage; share buyback still under review but the intention to restart when environment stabilises; 10p 2020 interim dividend declared
  • Current trading showing sequential improvement on Q2 but the market remains volatile: July LFL revenue less pass-through costs -9.2%. US -6.1%, UK -10.5%, Germany -7.2%, Greater China -18.6%, India -15.5%
  • Full-year 2020 LFL revenue less pass-through costs growth and headline operating margin expected to be within the range of analysts’ expectations5
  • Capital markets event to update on strategic progress, long-term efficiency savings and capital allocation planned before the 2020 year-end

Mark Read, Chief Executive Officer, WPP:

“After two months in which our strategic progress could be measured by growth outside Greater China, the second quarter saw an inevitable downturn, with like-for-like revenue less pass-through costs declining by 15%, albeit better than our expectations. Assuming there is no second wave nor major lockdowns, the second quarter is expected to be the toughest period of the year, although we remain cautious on the speed of recovery.

WPP reports 15.1% fall in net sales
Mark Read

“Our strategic transformation remains on track but as COVID-19 accelerates the change in our sector, we are accelerating our plans. We continue to attract new talent, invest in technology and e-commerce, and train our people in the skills they need for the future, with more than 20,000 receiving accreditations from Adobe, Amazon, Facebook, Google and Salesforce this year.

- Advertisement -

“We are working with our clients to help them get back to business, adapt their marketing strategies at speed and reshape their operations for a new world. Brands are seeing increases in online sales of 100% and more, and we are supporting eight of our top ten clients on e-commerce strategies. Our new business record is industry-leading, at $4 billion in the first half, including wins from Intel, HSBC and Unilever, and our pipeline remains strong.

“With £4.7 billion of liquidity thanks to the Kantar transaction, and as we deliver against our cost savings targets, our financial position remains strong. As a result, we are able to return to paying our dividend, with an interim dividend of 10p for 2020.

“I would like to thank our people around the world, the vast majority of whom have been working from home and have shown great creativity, agility and collective spirit to support our clients in challenging times.”

WPP’s Market environment

The market in the first two months of 2020 progressed in line with expectations before the impact of COVID-19 began to be widely felt from March onwards.

- Advertisement -
Read Also:  African Countries are building a Giant Free - Trade Area

As a result of the significant restrictions on many aspects of economic activity, GroupM now forecasts that the global advertising economy will decline by 11.8% in 2020, after a growth of 6.2% in 2019. Within this, spend on digital media is expected to increase to 54% of total spend in 2020, from 48% in 2019, as the impact of COVID-19 accelerates an underlying structural trend.

As consumers increased their time at home, we generally saw heightened levels of consumption of media and rapid expansion of e-commerce activity. As a result, businesses are looking to grow their e-commerce and multi-channel capabilities.

More specifically, TV and video consumption has grown rapidly, driven by on-demand and streaming services. Consumers have also needed to change their shopping patterns, with eCommerce surging, finding new adopters and penetrating new categories. On the other hand, media spend on outdoor, cinema and print has suffered materially.

Activity and spend trends by geography have for the most part been driven by the closing and re-opening of economies. Based on GroupM forecasts, China is expected to see only a 2.8% decline in the advertising market this year, reflecting its strong underlying economic growth and rapid and successful response to the pandemic.

- Advertisement -

Major markets in Europe, on the other hand, are forecast to decline 10-20% given the more sustained lockdowns and lower underlying growth. The USA is expected to decline by 7.5% or -12.9% excluding political spend.

In terms of sectors, marketing spend from consumer packaged goods, technology and pharmaceuticals businesses (56% of WPP’s revenue less pass-through costs in the first half) has held up relatively well as demand for their services has been less impacted or in some cases significantly enhanced.

Automotive, luxury, travel and leisure businesses (22% of revenue less pass-through costs) have been understandably the hardest hit and this, in turn, has been reflected in their marketing spend.

- Advertisement -
WPP reports 15.1% fall in net sales - Brand SpurWPP reports 15.1% fall in net sales - Brand Spur

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

WPP reports 15.1% fall in net sales - Brand SpurWPP reports 15.1% fall in net sales - Brand Spur

Latest News

Court Convicts Unity Bank Plc Vault Room Manager

The Maiduguri Zonal Office of the Economic and Financial Crimes Commission, EFCC, has secured the conviction Adam kaka Adam,...

Here’s What You Need to Know About Local Digital Marketing for Franchises

As a franchisee, you get a lot more support in running your business than you would if your location was an independent brand, but...

Why businesses should ensure data privacy in vendor relationships – Andrew Bourne

Whether we realize it or not, we are being tracked everywhere we go on the Internet. In fact, Internet surveillance is so widely used...

Local Bourse Kick-Start December on a Positive Note, Gain 0.30% to Sustain Uptrend

The local bourse today (Tuesday) began the month of December on a positive note, as the market performance index, the ASI, gained 0.30% to...

Google launches People Cards to help Africans who want to be found on Google Search

1 December 2020 - Google today introduced a new mobile-only feature that makes people more discoverable on Google Search. People Cards allow people to...
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -WPP reports 15.1% fall in net sales - Brand SpurWPP reports 15.1% fall in net sales - Brand Spur